Consumers are sick of ads – let your own happy customers spread the word for you
We’ve known for years that consumers are increasingly weary of digital advertising – irritated by the bombardment, untrusting of advertisers and automatically inclined to ignore any messages ads bring.
Clearly, this poses a problem for digital advertisers and brands trying to engage with their audience in meaningful ways. But ad blindness is not the only issue – cost of customer acquisition is also rocketing. The truth is, it’s never been more challenging to engage with consumers.
The result is that brands are having to think outside the box when it comes to their marketing activities. Referral marketing is a relatively new kid on the performance marketing block, but one that is making waves thanks to its unique ability to leverage trust and personal recommendations to reach audiences.
It offers scale for less and is powered by automated tech that provides a host of subsequent benefits. Let’s take a look at what referral marketing is, its benefits, and how to get started with it.
What is referral marketing?
There is a growing acceptance that personal recommendations are hugely valuable for businesses, and this is backed by a significant body of research. McKinsey learned that 63% of GenZ consumers consider their friends the most trusted source of recommendations when learning about products or a brand.
Similarly, Wharton School of Business has shown that referred consumers have a 16% higher lifetime value than the average customer. If you want consumers to stick around, referral marketing is a great bet for your business.
Referral marketing makes a great fit for partnership marketing because it relies on trust. impact.com has used its experience in the space to create and launch its own referral tool, impact.com/advocate, which allows people to earn incentives and rewards for recommending a brand. These might range from simple cash rewards to product discounts, or even a points-based system.
What is essential to the successful running of a referral marketing programme, however, is that a brand has exceptional products or services that consumers are keen to spread the word about in an organic fashion. Referral marketing relies on word-of-mouth and trust, so it will only work for great businesses, products and services.
What are the benefits of referral marketing?
Let’s count them:
- Rapid growth
Done correctly, referral marketing can be one of the most powerful ways of quickly and efficiently growing your business. It’s about turbocharging personal recommendations, and one of the greatest benefits is that your customers reap the rewards, too. It’s a great way to build loyalty while also increasing your customer base – a win-win.
- Revenue generation
Referral marketing offers great opportunities to generate revenue. Will Fraser, head of impact.com/advocate, predicts that the format “could generate as much as 20 percent of your new revenue each year”.
- Refined targeting
Referral marketing can also be a fantastically cost-effective way of reaching your target audience. Rather than spraying cash around in the hope of hitting your target audience, it allows you to tap into networks of satisfied, existing customers, producing a higher ROI as a result.
- Transferral of trust
A referral between friends also transfers the trust people have in your brand, spreading and sharing its credibility simultaneously and naturally. And, because this kind of recommendation holds more weight, referrals are more likely to convert than traditional channels. impact.com/advocate customer RealtyNinja, for example, experienced a two-times higher conversion rate than its paid search ads achieved.
- High-quality leads
And last, but not least, referral marketing drives high-quality leads. This is because it is human nature for people to refer goods and services to those they think will like them. Your potential customer is therefore pre-validated, with a much higher chance they will convert to loyal customers ready to engage with your brand.
How to get started with referral marketing
With impact.com/advocate, that’s easier than you might think, thanks to our one-stop platform, which uses automation to do most of the heavy lifting for you. But here is a checklist to get you started:
- Is your business big enough to supply the resources required to run an effective referral campaign, and is your brand mature enough, and highly-rated enough, to justify the time and energy spent running a great campaign?
- Set KPIs and define your goals for a referral marketing campaign. Without these your campaign will be rudderless, and therefore inefficient.
- Next, understand the different referral programs, and the incentives you want to offer. Different campaigns will suit particular programmes and incentives.
- Make it easy for customers to refer your business by providing multiple sharing options as part of the creative, and employ predefined sharing templates so that your referrers don’t have to.
- Finally, make great creative for your referral campaign, promote it as widely as possible, and implement quality analytics and reporting, allowing you to refine your referral campaigns and push for greater performance.
These are just a few ideas to get you going with referral marketing. It’s tough out there for brands looking to engage audiences in meaningful, authentic ways. With the rising cost of acquisition and increasing consumer ad blindness, businesses employing the most innovative, creative and engaging forms of advertising will reap the rewards – and referral marketing fits the bill perfectly.
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ABOUT THE AUTHOR
James Bennie , AVP Customer Success at impact.com
James is a senior member of the leadership team at global marketing technology company, impact.com. In his current role as Area Vice President, Customer Success, EMEA, James works with impact.com’s key clients to drive growth through marketing and manages the Customer Success team across EMEA. James has over a decade of experience in senior roles within the performance marketing industry; including management roles at Affilinet.